It introduces asymmetry of information. Some forms of such asymmetry are obviously unethical and illegal - the good old insider trading. Some are legal and ethical(#) - just having better research on public information is ok.
Buying extra {milli, micro}seconds to get ahead of the competition is just too new to have a general consensus on its ethical status.
(#) In the mainstream. Obviously you can find contrarians to any position.
A) these microwave towers are mainly on routes to/from commodities exchanges that have equities derivatives and the equities exchanges where the underlying equities are traded, or between 2 different commodities exchanges. Insider trading, you will find, is much less regulated in commodities trading as there is all manner of information asymmetry built into the market, in fact one of the purposes of the market is to discover a valid price in the face of this information asymmetry.
B) Buying extra time via technology is as old as trading. If you read the article, or taken an architectural tour of the CBOT building in Chicago you will have noticed that one of its main design requirements was to house telecommunications gear.
I was specifically replying to the idea that we haven't had time to judge the ethics of communication technology in trading, when it is in fact a basic market force.
I'm not an ethicist so I'm hesitant to speak on the ethics of market forces, but I will say:
A) How do you prevent some actors from getting information before others? Do all actors have to wait for the slowest participant? Why should we prevent it?
B) In general, faster dissemination of information leads to a more efficient market, we should encourage this, not discourage it.
Buying extra {milli, micro}seconds to get ahead of the competition is just too new to have a general consensus on its ethical status.
(#) In the mainstream. Obviously you can find contrarians to any position.